Zeti: Rates to stay unchanged for now

MALAYSIAN central bank Governor Tan Sri Dr Zeti Akhtar Aziz said interest rates will remain unchanged for now as priority is given to providing credit to businesses and consumers.

“Unless there’s further developments, at this point in time, that is the rate,” she told reporters in Kuala Lumpur today.

“Our assessment is that it is not constructive to have too low rates. The issue is more access to financing, and that is why we are focusing on this.”

Bank Negara Malaysia last month lowered its benchmark interest rate by three-quarters of a percentage point to 2.5 per cent to help resuscitate economic growth amid the deepening global recession.

Industrial output fell 15.6 per cent in December, the deepest drop since at least February 2002 when Bloomberg data began, as manufacturing slumped, a report today showed.

The central bank started cutting interest rates in November, when it lowered borrowing costs for the first time since 2003. It has also reduced the amount of money lenders need to set aside as reserves twice.

The central bank’s monetary actions had been “front-loaded,” Zeti said today.

Malaysia is planning a second economic stimulus package after announcing spending worth RM7 billion (US$1.9 billion) in November. - Bloomberg